Tail spend refers to the portion of an organization’s budget dedicated to numerous small purchases from various suppliers. It typically results in a high volume of transactions — around 80% — but contributes to a low percentage (around 20%) of an organization’s total spend.

What is the 80/20 rule?

Procurement teams refer to this phenomenon as the 80/20 rule, or the Pareto principle. It’s a concept that observes that roughly 80% of the effects come from 20% of the causes. It’s not a strict mathematical law, but rather a framework for prioritizing. It highlights the importance of identifying the “vital few” factors (unchecked inputs) that drive the majority of results. In the context of tail spend management, this means focusing on strategies to optimize these frequent, low-value purchases for better cost control and improved efficiency.

What are some challenges that unmitigated tail spend creates?

Lack of visibility, inefficiencies, hidden costs, missed savings opportunities, compliance risks.

What are the benefits of a tail spend management program?

Cost optimization, improved visibility and control, streamlined procurement, better spend decisions, improved software utilization.

How can a SaaS Management Platform help tame tail spend?

Enhanced visibility and control, streamlined procurement processes, actionable insights and cost optimization.

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What is tail spend and how can procurement leaders avoid it?

Image depicts a group of people discussing how to combat tail spend

While tail spend purchases may seem insignificant due to their size, leaving them unchecked can create some serious pain points down the line.

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